US bribery charges against Indian billionaire Gautam Adani have ensnared one of Canada’s biggest public pension managers, adding to the embarrassment of its renewable energy investments.
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Published on 21 Nov 2024 • 3 minutes of reading
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(Bloomberg) — U.S. bribery charges against Indian billionaire Gautam Adani have engulfed one of Canada’s biggest public pension managers, adding to the embarrassment of a renewable energy investment that has turned sour.
Three former employees of the Caisse de Depot et Placement du Quebec were charged with conspiracy to violate the Foreign Corrupt Practices Act on Wednesday. The list of accused includes Cyril Cabanes, former managing director of CDPQ’s Asia-Pacific infrastructure unit, as well as Saurabh Agarwal and Deepak Malhotra, who also worked for the fund manager.
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US prosecutors say the defendants, including Adani, one of the world’s richest men, promised to pay more than $250 million in bribes to Indian government officials to win solar energy contracts, and that they hid the plan while seeking money from US investors.
Criminal indictments and related cases by the Securities and Exchange Commission allege that executives at Adani Green Energy Ltd were among those who paid bribes to state officials. Some of the bribes ended up being paid, at least indirectly, by Azure Power Global Ltd., a builder and operator of solar power projects that is a partner of Adani Green, according to the SEC.
The regulator’s complaint said Cabanes “conspired” with others to make the payments while he was an employee of CDPQ and an Azure Power board member.
CDPQ is Azure’s majority shareholder, and Cabanes and Malhotra represent the money manager on the solar company’s board until October 2023, when they step down.
Azure said it was cooperating with US authorities on the investigation. The shares have been delisted from the New York Stock Exchange and are now traded over the counter, having lost almost all of their value.
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“CDPQ is aware of charges filed in the U.S. against certain former employees,” a spokesperson for the Quebec pension manager said via email. “These employees have all been fired by 2023, and CDPQ is cooperating with US authorities.” The spokeswoman declined further comment.
The government is reluctant
Prosecutors allege that executives linked to Adani Green paid or promised bribes to overcome the Indian state government’s reluctance to sign power purchase agreements – contracts that are crucial to making the numbers work in new solar manufacturing projects.
Over several months in 2022 and 2023, Cabanes “routinely strategized” with Azure’s chairman to determine how to pay the one-third bribe from Azure, the SEC complaint said.
Finally, they got a plan that would see Azure give up a share of the profits from a huge power project in the southern state of Andhra Pradesh – to the benefit of Adani Green, which gets a bigger stake.
“Cabanes devised and directed the coordination of efforts to compensate Adani Green and Adanis for the payment or promise of bribes,” colluding with others at CDPQ and Azure to conceal their wrongdoing, the SEC document claims. Cabanes did not respond to multiple requests for comment from Bloomberg.
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CDPQ, which oversees C$452 billion ($324 billion) on behalf of pension plans and other accounts in Canada’s second-largest province, has made several investments in Azure since 2016, increasing its stake by more than 50%. It invested about $480 million, according to calculations made by Bloomberg last year.
“If there is a deviation from the government’s point of view, the plan is to take immediate and brutal action from the Caisse,” said Charles Emond, chief executive of the CDPQ, in an interview with Bloomberg News in June 2023.
Although the fund had significant losses in Azure, “the reality is that there are still very good assets underneath. There are factories, companies that distribute electricity to millions of Indians,” Emond said at the time. “Stock price is one thing, value is another.”
Another Canadian pension manager, Ontario Municipal Employees Pension System, is Azure’s No. 2 holder with about 21%, according to data compiled by Bloomberg. The infrastructure arm bought a stake in Azure for $219 million in a deal announced in July 2021.
Julian Gratiaen, who oversees the legal aspects of Omers’ infrastructure assets in Asia, has been on the Azure Board since July. He replaces Delphine Voeltzel, another Omers executive who served on the board from May 2022 to July 2024, according to LinkedIn.
“The allegations in this indictment are concerning,” said a spokesman for Omers. “The events alleged in the formal charges began before he became a minority shareholder in Azure Power in 2021. Omers has nothing to do with the alleged actions and will continue to cooperate with the investigation.”
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